Catom Annual Report 2020 EN

Financial risk recognition, risk appetite and risk control

Liquidity and financing risks Catom’s financing policy is aimed at maintaining its sound financial position. Thanks to a sound balance sheet structure and more than ample credit facility, Catom has plenty of capacity to absorb liquidity risks and sufficient access to credit on an ongoing basis. Currency risks Catom’s functional currency is the euro. In the wholesale department, a different functional currency, the US dollar, is used for part of the purchasing of motor fuels. Currency risks arising from these dollar purchases are not hedged because the exposure is limited in terms of absolute amounts and only occurs for short periods (days), and because the currency fluctua tions have only a limited impact on our competitive position in the market.

In the performance of its business activities, Catom is exposed to various types of operational and non-operational financial risks. The risk appetite is limited, and mitigating measures have been drawn up. The risk appetite is evaluated periodically by the Executive Board and management, and if necessary adjusted; actual indicators play a key role here. This section describes the main financial risks. Credit risks One of the main risks is the bad-debt risk related to customers. The level of this risk is largely determined by the prices of motor fuels and the related indirect taxes and tariffs, combined with the applied payment periods. This risk is mitigated as much as possible by means of a strict debtor policy.

39